Public sector supply chains' impact on rural poverty
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The document summarizes a 3-phase study on the effectiveness of public sector supply chain policies in reducing rural poverty in Colombia. Phase 1 involved an econometric analysis and found some policies were not well targeted at high poverty areas. Phase 2 analyzed policy implementation in 3 regional supply chains, finding variable levels of competitiveness, governance, equity, inclusion and poverty impacts. Phase 3 will examine impacts on households.
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Public sector supply chains' impact on rural poverty
- 1. How effective are public sector supply chains’ policies for rural poverty reduction? Phase 1: An econometric analysis of the effectiveness of supply chain public policy in promoting competitiveness and reducing poverty
- 2. Policy Framework 9 Strategic Law 811 Objectives Focus on Decree Formalization Competitiveness 3800 and Inclusion Planning Res. 186 Monitoring
- 3. Structure of National Supply Chain Organizations Thematic Regional Committees or Committee Tables National Regional Council Committee Technical • Technical Secretary Secretary • Competitive Regional Agreement Committee • Annual Action Plan, Follow-up • Regional Secretary • Competitive Agreement • Annual Action Plan, Follow-up
- 4. Policy Focus Number of Supply Chains by Department Indicators • High Poverty • High Rural Poverty • Low Human Development • Land Inequality • Property Inequality
- 5. Policy Focus 10 Chains Studied • Avocado • Fique • Rice • Fruit • Cocoa • Guava • Rubber • Mango • Citrus • Plantain Policy not well focused on populations with most poverty, underdevelopm ent and inequality.
- 6. Targeted Poverty Intervention Programs Alianzas MADR Not necessarily Productivas well Oportunidades focused, potenti MADR Rurales ally due to program MIDAS USAID objectives ADAM USAID
- 7. Policy Effectiveness Yield growth as a function of political performance Improved Better Reduced Policy Yield Income Poverty
- 8. Calculating the Institutional Strength Index (IFI) 0: None Regional 1/3: Inactive Committee 2/3: Active, Infrequent 1: Active, Regular IFI Score Regional 0: None Scale: 0-3 Secretary 1: Regional Secretary Higher Score, Stronger Political Presence 0: None Competitive 1/3: In Progress Agreement 2/3: Approved, Inactive 1: Approved, Active
- 9. Policy Strength and Variability Average IFI Score and Degree of Variability by Supply Chain Average IFI Score Degree of Variability Average IFI Score
- 10. Policy Strength by Region Strong positive relationship between number of supply chains and variability Unclear relationship between IFI and number of regional committees
- 11. How effective are public sector supply chains’ policies for rural poverty reduction? Phase 2: A meso-regional analysis of the implementation of supply chain policy to promote competitiveness and reduce poverty
- 12. Policy Implementation Analyze the structure, function and Structured interviews with results of policy key representatives of implementation at the three selected regional regional level in terms of: supply chains: • Competitiveness • Governance • Cocoa, Santander • Equity • Plantain, Quindio • Social Inclusion • Vegetables, Boyacá • Poverty
- 13. Preliminary Findings Cacao, Santander • Competitiveness: Improved production and yield; improved health, sanity, and maintenance of crops; lack of technical assistance • Governance: Weak, unrepresentative strucuture; strong integration with national committee; variable support by local government • Equity: Lack of negotiating power; stagnant market access; failure to exploit new market advantages • Social Inclusion: Many small producers associated and represented in committee; training and education initiatives; • Poverty: Improved production leads to better income; price fluctuation vulnerability; correspondence with poverty intervention programs
- 14. Preliminary Findings Vegetables, Boyaca • Competitiveness: Improved production and yield; improved health, sanity, and maintenance of crops; limited spectrum • Governance: Organized, inclusive structure; strong leadership; strong integration with national committee; under-representation of some sectors; lack of support by local government • Equity: Improved negotiating power; improved market access; foreign/export markets identified; reduced intermediation • Social Inclusion: Small producer associations very present and represented in committee; training and education initiatives; direct contact producer-comercializer • Poverty: Limited Scope; price fluctuation vulnerability; limited correspondence with poverty intervention programs
- 15. Project Timeline Phase 1: Econometric Study • May 2011- May 2012 Phase 2: Meso Study • May 2012- October 2012 Phase 3: Household Study • November 2012-September 2012
Notas del editor
- Overthepast 15 years, there has been a considerable internationalpushbehind rural development and agricultureprogramsbaseduponpublicsupportforsupplychains. Nationalgovernments and interstateaidorganizationsalikeadoptsupplychainpolicyprogramsbasedupoontheassumptionthatsupportwill lead to more competitivesupplychains and as a result, rural povertyreduction. Despitethewidespreadadoption of this line of thinking, thereisscantevidencetotoevaluateeither of theseclaims. Thisstudyoffersthefirsteconometricanalysis of supplychains at the regional level.
- Law 811 of 2003 outlinesninestrategicobjectivesforthedevelopment of supplychains in Colombia. Theobjectivesfocusprimarilyonimproving COMPETITIVENESS and INCLUSSION. COMPETITIVENESS mayencompassmanyaspects, includingreduction of costs, efficiency, accessto new markets, etc. However, withinthecontext of thisstudy (and as itisfrequentlyapplied in Colombianpolicy), competitivenessisconsidered in terms of PRODUCTION and YIELD. INCLUSSION likewise has manyapplications, however in thecontext of supplychainpublicpolicy, itmoststrongly relates totheinvolvement of smallholders in theplanning and development of policy. Theendgoal of inclussionbeingtheimprovedeconomic position betterlivelihood of the rural poorinvolved in theagricultural sector. Law 811, in conjunctionwithDecree 3800 of 2006 and Resolution 186 of 2008, creates a policyframeworkforachievingcompetitiveness and inclussionthroughtheinstitutionalization of supplychainorganizations at thenational and regional level.
- The current structure of the National Supply Chain Organizations emphasizes the recently emerging normative focus on the formalization of supply chains at both the national and local level. This structure encourages regional committees to engage smaller actors that play instrumental roles at the regional level, formally recognizing their responsibilities and perceived benefits through the confirmation of the Regional Competitive Agreements and Annual Action Plans. Likewise, the policy assumes that organizing regional actors under Regional Committees facilitate connections between the local and national chain and thus more local representation at the national level.
- Itisimportanttoaddress, then, whetherthisproliferation of localcommittees in factresults in theextension in policybenefitstosupplychainactors in theleastdeveloped, most vulnerable municipalities. Makingtheassumptionthatpolicyiniciativeswillresult in improvedproduction and yield in theareas in whichpolicyisfocused, thestudycontemplatestherelationshipsthatexistbetweenannualproduction and yield of selectedsupplychains and severalsocioeconomicindicators.Thesocioeconomicindicatorsconsideredinclude: % populationwithunsatisfiedbasicneeds% rural populationwithunsatisfiedbasicneedsHuman developmentindexGINI Index of landinequalityGINI Index of propertyinequality
- Thestudyconsidered 10 individual chainsthatwereselectedbasedupontheavailability of data and withtheintention of analyzing a widevariety of chainorganizationtypes. Theresultssuggestthatsupplychainpolicy has notnecessarilybeeneffective in sectorswiththegreatestpoverty and rural poverty, withlowlevels of human development, orwhereland and propertyinequalities are most extreme. Forexample, in the case of RICE, theresultsreveal: Strong NEGATIVE relationshipbetween PRODUCTION and POVERTY and RURAL POVERTYStrong NEGATIVE relationshipbetween YIELD and POVERTY and RURAL POVERTYStrong POSITIVE relationshipbetween PRODUCTION and HUMAN DEVELOPMENT INDICATORS POSITIVE relationshipbetween PRODUCTION and LAND INEQUALITYIn otherwords, publicpolicyforthe rice supplychainismostfocused in areaswithlowpoverty, highinequality, and high human development.
- Thestudyalsoanalyzesthefocus of the TARGETED POVERTY INTERVENTION programsALIANZAS PRODUCTIVAS OPORTUNIDADES RURALES Conductedby MADR, andMIDASADAMCarriedoutby USAIDAlthoughboth sets of programspositively relate toimprovedproduction, none of thesefourprogramsisconsistentlyfocusedonthemost vulnerable populations. In otherwords, none of theprograms show anespeciallywellorientedfocus.
- Thestudythenseeksto determine towhatdegreepolicyinitiatives are effective in increasingcompetitiveness and reducingpoverty. Assumingthatgrowth in municipal yieldscorrelatespositivelywithworkers’ incomes, we can concludethatpolicyeffectively reduces povertybyincreasingthecompetitivecapacity of municipalities. Hence, thestudyanalyzes YIELD GROWTH as a function of POLITICAL PERFORMANCE, controllingfor variables thatdirectlyaffectyield, such as human development, infrastructure, marketconditions, climate and geography. Suchananalysiscallsfor a QUANTIFISABLE measure of policy performance, forwhichtheauthorconstructsthe INSTITUTIONAL STRENGTH INDEX (IFI)
- The IFI isstructuredtomeasuretheinstitutionalstrength of publicpolicybyassessingthedegreetowhichdesignatedsupplychainpolicystructures are IMPLEMENTED and UTILIZED at the regional level. The IFI Score isdefinedpositivelyon a scalefrom 0 to 3, higher scores indicatingbetterpolicy performance. The IFI considersthethreecomponents of regional supplychainorganization:REGIONAL COMMITTEE: Existence and level of activityO: No committee1/3: Committee in formation2/3: Committeeestabilished and meetsoccassionally1: Committeeestablished and meetsregularlyREGIONAL SECRETARY: 0: None1: ExistsCOMPETITIVE AGREEMENT:0: None1/3: Beingdeveloped2/3: Exists, in theprocess of beingimplemented1: Exists, fullyimplemented
- Resultsindicatethatpolitical performance variesgreatlybetweensupplychain. Chainswiththehighest IFI scores:Potato (2.8)Fique (2.6)Cocoa (2.4) Chainswithlowest IFI scores: Panela (0.4)Tobacco (0.4) Anequallyimportantindicator of politicalstrengthisthedegree of variabilitybetween IFI scores at the regional level. Thedegree of variabilityreferstotheaveragestandarddeviation of regional IFI scores fromtheaverage IFI score. Greatervariabilityindicatesthatpublicpolicyis mucho more effective in someregionsthan in others. Again, somechainsexhibitveryuniformpolicy performance, such as:Potato (0.2) Cotton (0.4)Whileothershavehighdegrees of variability:Forestry (1.4)Palm oil (1.4) NOTE:Whenconsideringvariability, itisalsoimportantto note thenumber of regions in whichthechainopperates; somechainshave 6 prioritzedzones and cultivate in 10+ regions, whileothers are confinedtolessthan 5 departments
- Just as in the case of individual supplychains, certaindepartmentshavebetterpolitical performance thanothers:Putumayo (2.4)Caquetá (2) Vs.Valle de Cauca (0.2) Casanare (0.4) Equally, somedepartmentshavegreatervariation in thelevelspolitical performance thatcharacterizethechains. Departmentslike: Nariño, Cauca and Meta Havegreatervariability (1.4). Conversely, Valle de Cauca and CasanareHost supplychainsthat are characterizedby more similar levels of politicalperfromance ( variability score of 0.4) One of themostsignificantfindingsconcernstherelationshipbetweenthe NUMBER OF REGIONAL COMMITTEES and the INSTITUTIONAL STRENGTH of chainpolicy. NO CLEAR RELATIONSHIP isestablishedbetweenthe NUMBER OF REGIONAL COMMITTEES and IFI SCORE. However, Thereis a STRONG POSITIVE RELATIONSHIP betweenthe NUMBER OF REGIONAL COMMITTEES in a department, and the DEGREE OF VARIATION of policystrength (0.443). Thisistosaythatthe more regional chainssupportedby a region, thelessuniformtheirpoliticalstrengthtendsto be. Limitedresources and funding and theimportance of theinterest and involvement of local government are factorsthathelptoexplainthisdiscovery.
- This second phase of the investigation aims to build upon the information generated by the creation and application of the IFI Index. Utilizing the information regarding regional and chain policy performance, phase two of the investigation will tease out possible reasons behind inter-regional differences in policy performance, attempting to establish connections between competitiveness, governability, equity, social inclusion and poverty.
- Over a six month period of time, the investigation will study 3 regional chains characterized by three distinct levels of institutional strength, as determined by the IFI. We have selected to study:Cacao in Santander- High IFI scorePlatano en Quindio- Middle IFI score Hortalizas in Boyacá- Low IFI scoreThe investigation will analyze policy performance in terms of competitiveness, governance, equity, social inclusion and poverty in order to identify key factos in terms of successes, limitations, challenges and lessons learned. The end goal is to be able to offer recommendations to better the development and implementation of supply chain public policy. Initial analysis relies on secondary sources to uncover the structure of policy planning, development, funding, implementation and monitoring. Next, interviews are conducted with key actors within the regional supply chain in order to obtain undocumented or unavailable information from:Small producersUnionSmall and large industryComercial sectorResearch and investigation sector Government
- Over a six month period of time, the investigation will study 3 regional chains characterized by three distinct levels of institutional strength, as determined by the IFI. We have selected to study:Cacao in Santander- High IFI scorePlatano en Quindio- Middle IFI score Hortalizas in Boyacá- Low IFI scoreThe investigation will analyze policy performance in terms of competitiveness, governance, equity, social inclusion and poverty in order to identify key factos in terms of successes, limitations, challenges and lessons learned. The end goal is to be able to offer recommendations to better the development and implementation of supply chain public policy. Initial analysis relies on secondary sources to uncover the structure of policy planning, development, funding, implementation and monitoring. Next, interviews are conducted with key actors within the regional supply chain in order to obtain undocumented or unavailable information from:Small producersUnionSmall and large industryComercial sectorResearch and investigation sector Government
- Over a six month period of time, the investigation will study 3 regional chains characterized by three distinct levels of institutional strength, as determined by the IFI. We have selected to study:Cacao in Santander- High IFI scorePlatano en Quindio- Middle IFI score Hortalizas in Boyacá- Low IFI scoreThe investigation will analyze policy performance in terms of competitiveness, governance, equity, social inclusion and poverty in order to identify key factos in terms of successes, limitations, challenges and lessons learned. The end goal is to be able to offer recommendations to better the development and implementation of supply chain public policy. Initial analysis relies on secondary sources to uncover the structure of policy planning, development, funding, implementation and monitoring. Next, interviews are conducted with key actors within the regional supply chain in order to obtain undocumented or unavailable information from:Small producersUnionSmall and large industryComercial sectorResearch and investigation sector Government